The Financial Sector Development and Its Impact on Sectoral Economic Growth in African Countries

This study examines how different dimensions of financial sector development affect sectoral economic growth across 30 African countries from 2000 to 2020 using panel ARDL estimation techniques. The study focuses on four key dimensions of financial development: financial deepening, efficiency, liquidity, and stability, as well as three critical sectors of economic growth: manufacturing, trade, and agriculture. The study results reveal that financial depth and efficiency positively and significantly impact long-run manufacturing growth, while financial stability negatively affects it. Additionally, financial depth, liquidity, and efficiency significantly and positively drive long-run trade sector growth. However, the effect on agricultural growth shows an insignificant impact. These findings have important implications for policymakers. Specifically, tailored regulatory policies could help allocate financial resources in a way that promotes growth, depending on the sector.